CCI Online Learning
50% OFF in CA/CS/CMA Subjects
     
CIBIL

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Term of the Day - Callable Security


Rahul Gupta (Project Controller ACA MBA(Fin.))     17 May 2010

Rahul Gupta
Project Controller ACA MBA(Fin.) 
 1101 likes  8004 points

| My Other Post

What Does Callable Security Mean?


A security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date. Since the holder of a callable security is exposed to the risk of the security being repurchased, the callable security is generally less expensive than comparable securities that do not have a call provision.

 

The conditions of the call provision are established at the time the security is issued. Callable securities are commonly found in the fixed-income markets and allow the issuer to protect itself from overpaying for debt.

For example, a bond issuer may choose to redeem a certain issue when the current market rate falls below the coupon rate of the bond by a set amount. This allows the issuer to reissue the bonds at a lower rate and avoid paying a higher interest rate.




Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  


Related Threads


Loading

Popular Discussion


view more »



Trending Tags
GST Live Class    |    x